Notice of Final Results and Partial Rescission of Antidumping Duty Administrative Review: Canned Pineapple Fruit From Thailand

DEPARTMENT OF COMMERCE

International Trade Administration

[A-549-813]

Notice of Final Results and Partial Rescission of Antidumping

Duty Administrative Review: Canned Pineapple Fruit From Thailand

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

SUMMARY: On June 8, 1999, the Department of Commerce published the

preliminary results of its administrative review of the antidumping

duty order on canned pineapple fruit from Thailand. This review covers

five producers/exporters of the subject merchandise. The period of

review is July 1, 1997, through June 30, 1998. Based on our analysis of

comments received, these final results differ from the preliminary

results. The final results are listed below in the ``Final Results of

Review'' section.

EFFECTIVE DATE: December 13, 1999.

FOR FURTHER INFORMATION CONTACT: David Layton or Charles Riggle, Office

5, AD/CVD Enforcement, Import Administration, International Trade

Administration, U.S. Department of Commerce, 14th Street and

Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-

0371 and (202) 482-0650, respectively.

SUPPLEMENTARY INFORMATION:

Applicable Statute and Regulations

Unless otherwise indicated, all citations to the statute are

references to the provisions effective January 1, 1995, the effective

date of the amendments made to the Tariff Act of 1930 (the Act) by the

Uruguay Round Agreements Act (URAA). In addition, unless otherwise

indicated, all citations to Department of

[[Page 69482]]

Commerce (the Department) regulations are to the regulations codified

at 19 CFR Part 351 (April 1998).

Background

This review covers the following producers/exporters of merchandise

subject to the antidumping duty order on canned pineapple fruit from

Thailand: Siam Food Products Public Co., Ltd. (SFP); The Thai Pineapple

Public Co., Ltd. (TIPCO); Siam Fruit Canning (1988) Co., Ltd. (SIFCO);

Kuiburi Fruit Canning Co., Ltd. (KFC); and Vita Food Factory (1989)

Ltd. (Vita). We also received review requests from Malee Sampran Public

Co., Ltd. (Malee) and Dole Food Company, Inc., Dole Packaged Foods

Company, and Dole Thailand, Ltd. (collectively, Dole). For the reason

noted below, we are rescinding the review with respect to Malee and

Dole. On June 8, 1999, the Department published the preliminary results

of this review. See Notice of Preliminary Results and Partial

Rescission of Antidumping Duty Administrative Review: Canned Pineapple

Fruit From Thailand, 64 FR 30476 (Preliminary Results). On July 8 and

15, 1999, we received case briefs and rebuttal briefs, respectively,

from Maui Pineapple Co., Ltd. and the International Longshoremen's and

Warehousemen's Union (jointly, the petitioners), TIPCO, and SFP.

Scope of Review

The product covered by this review is canned pineapple fruit (CPF).

CPF is defined as pineapple processed and/or prepared into various

product forms, including rings, pieces, chunks, tidbits, and crushed

pineapple, that is packed and cooked in metal cans with either

pineapple juice or sugar syrup added. CPF is currently classifiable

under subheadings 2008.20.0010 and 2008.20.0090 of the Harmonized

Tariff Schedule of the United States (HTSUS). HTSUS 2008.20.0010 covers

CPF packed in a sugar-based syrup; HTSUS 2008.20.0090 covers CPF packed

without added sugar (i.e., juice-packed). Although these HTSUS

subheadings are provided for convenience and for customs purposes, our

written description of the scope is dispositive.

Partial Rescission of Antidumping Duty Administrative Review

On August 27, 1998, and October 30, 1998, Malee and Dole,

respectively, timely filed to withdraw their requests for review.

Because there were no other requests for review of either company, we

have rescinded the review with respect to both Malee and Dole in

accordance with 19 CFR 351.213(d)(1).

Fair Value Comparisons

We calculated export price (EP) and normal value (NV) based on the

same methodology used in the preliminary results. We corrected clerical

errors with respect to the calculation of SIFCO's normal value. See

SIFCO's analysis memorandum dated December 6, 1999.

Cost of Production

We calculated the COP based on the same methodology used in the

preliminary results. We corrected clerical errors with respect to SFP's

and SIFCO's total manufacturing costs. See the respective companies'

analysis memoranda dated December 6, 1999.

Analysis of Comments Received

We gave interested parties an opportunity to comment on the

preliminary results. As noted above, we received comments and rebuttal

comments from the petitioners and two of the respondents (SFP and

TIPCO).

Comments on General Issues

Comment 1--Exchange Rate Methodology

SFP objects to the exchange rate methodology used in the

calculation of the preliminary results, arguing that it deviates from

the Department's standard methodology as described in Policy Bulletin

96.1 (Policy Bulletin). See 61 FR 9434 (March 8, 1996). Contending that

this methodology had no precedent at the time of the devaluation of the

Thai baht, SFP says it was impossible for the company to anticipate the

exchange rate to be used in the preliminary results and, therefore, it

could not adjust its prices accordingly. SFP argues that one of the

stated objectives in the Policy Bulletin is that a measure of

predictability must exist, and that its preliminary dumping margin

would have been much lower had the Department applied its standard

exchange rate methodology.

Moreover, SFP appears to argue that the Department applied a

special averaging period in this review. It acknowledges that the

Department used a similar methodology in the final determinations of

three recent antidumping investigations involving South

Korea,1 but contends that the 40-percent drop in the value

of the Korean won at the end of 1997 greatly exceeds the 18-percent

fall of the Thai baht in July 1997. SFP believes that the drop in the

baht is not large enough to be classified as ``precipitous'' nor merit

special treatment in the margin calculation.

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\1\ See Emulsion Styrene-Butadiene Rubber from the Republic of

Korea, 64 FR 14865 (March 29, 1999) (Rubber from Korea), Stainless

Steel Plate in Coils from the Republic of Korea, 64 FR 15444 (March

31, 1999) (SSP from Korea), and Stainless Steel Round Wire from

Korea, 64 FR 17342 (April 9, 1999) (SSRW from Korea)

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Furthermore, SFP contends that the legal basis for the special

averaging period used in Rubber from Korea, SSP from Korea and SSRW

from Korea applies only to investigations, that section 777A(d)(1)(B)

of the Act limits the comparison periods of administrative reviews to

the corresponding calendar month, and that the Department cited no

authority from the statute, the regulations, or prior cases as a basis

for the methodology applied in the preliminary results.

For these reasons, SFP argues that for the final results, the

Department should not adopt the method used in the preliminary results,

but should use either the normal 40-day moving average or actual daily

rates.

The petitioners also object to the exchange rate methodology used

in the preliminary results, and request that the Department use the

methodology outlined in the Policy Bulletin when calculating the final

results.

First, the petitioners reiterate the need for predictability in the

exchange rate methodology. Second, they argue, the Department's

decision to deviate from its ``normal'' methodology in the preliminary

results was improper because the Department's threshold for finding a

drop in the value of a foreign currency to be ``precipitous'' has been

much higher in other cases. Specifically, the petitioners point to the

Department's recent finding that the 20-percent decline in the value of

the New Taiwan dollar over the course of a 12-month period--a decline

of a similar magnitude to that of the baht--was not large enough to

justify any special action. (See Notice of Final Determination of Sales

at Less Than Fair Value: Stainless Steel Sheet and Strip in Coils from

Taiwan, 64 FR 30592 (June 8, 1999) (SSSS from Taiwan).)

The petitioners also argue that in the preliminary results, the

Department focused on a very narrow time period when examining the

decrease in the value of the currency, i.e, the Department found that

the baht declined 18 percent over a one-day period. If studied from a

longer time perspective, they contend that it becomes clear that the

decline took the form of a steady progression rather than a precipitous

drop and, as such, the Department has no reason to adopt a special

methodology. For the same reason, the petitioners disagree with SFP's

proposal that the Department consider using the actual daily exchange

[[Page 69483]]

rates as an alternative to its 40-day moving average benchmark

methodology. The petitioners believe that the only justification for

using the actual daily exchange rates would be if the Department

determined that the Thai inflation rate was significant during the POR

and, therefore, that it would be appropriate to apply the significant

inflation margin methodology (see the comment on significant inflation,

below).

TIPCO rejects the assertion that the Department erroneously

deviated from its established exchange rate methodology in the

preliminary results. The company argues that the 18-percent fall in the

value of the baht was indeed a ``precipitous decline'' because of the

magnitude of the drop, the short time period over which it occurred,

and the fact that the baht did not rebound in any significant way.

TIPCO rejects the petitioners' comparison with SSSS from Taiwan,

stating that the 20-percent decline in the New Taiwan dollar was

gradual and took place over a prolonged period of time. The

Department's decision not to treat the fall of the New Taiwan dollar as

precipitous is, therefore, not relevant for the present case, TIPCO

says.

TIPCO also defends the Department's use of a stationary average as

the benchmark during the ``post-precipitous period.'' According to

TIPCO, this is simply an application of a modified benchmark similar to

what was used in Rubber from Korea and Notice of Final Determination of

Sales at Less Than Fair Value: Stainless Steel Sheet and Strip in Coils

From the Republic of Korea, 64 FR 30664 (June 8, 1999). TIPCO believes

that the Department correctly applied its exchange rate methodology as

outlined in the Policy Bulletin. Although the Bulletin does not specify

how the benchmark should be calculated after a precipitous decline of a

currency, TIPCO argues that the use of a modified benchmark is fully

consistent with the spirit of the Policy Bulletin.

Department's Position: Contrary to the arguments put forth by SFP

and the petitioners, we believe that the methodology employed in the

preliminary results was consistent with our exchange rate methodology

used when a country's currency has experienced a ``precipitous drop.''

This methodology is outlined in Policy Bulletin 96.1, and in following

our prescribed methodology, we ensured predictability in the exchange

rates used in the preliminary results. We also note that we did not

apply a special averaging period, as SFP has suggested. Furthermore,

because we continue to find that the July 2, 1997, decline of the baht

was ``precipitous and large'' within the meaning of the Policy

Bulletin, we disagree with SFP's and the petitioners' suggestion that

we should apply an exchange rate methodology using a 40-day moving

average benchmark throughout the POR in the calculation of the final

results of this review. However, as discussed below, we have modified

our exchange rate methodology consistent with Final Results of

Antidumping Duty Administrative Review; Certain Welded Carbon Steel

Pipes and Tubes from Thailand, 64 FR 56759 (October 21, 1999) (Pipes

and Tubes from Thailand).

As stated in the preliminary results, we made currency conversions

into U.S. dollars in accordance with section 773A of the Act, based on

exchange rates in effect on the dates of the U.S. sales as certified by

the Federal Reserve Bank. Section 773A(a) of the Act directs the

Department to use a daily exchange rate in order to convert foreign

currencies into U.S. dollars unless the daily rate involves a

fluctuation. It is the Department's practice to find that a fluctuation

exists when the daily exchange rate differs from the benchmark rate by

2.25 percent or more. The benchmark is defined as the moving average of

rates for the past 40 business days. When we determine a fluctuation to

have existed, we substitute the benchmark rate for the daily rate, in

accordance with established practice. See Policy Bulletin; Preliminary

Results 64 FR at 30480; and Preliminary Results of Antidumping Duty

Administrative Review; Aramid Fiber Formed of Poly Para-Phenylene

Terephthalamide From the Netherlands, 64 FR 36841, 36843 (July 8,

1999).

As discussed in Pipes and Tubes from Thailand (64 FR at 56763), we

continue to find that the drop of more than 18 percent in the dollar-

baht exchange rate on July 2, 1997, from the previous day's rate,

constitutes a ``large and precipitous'' decline. However, we do not

find that the gradual decline of the baht that occurred over nearly

seven months, from July 2, 1997, to January 31, 1998, qualifies as a

``large and precipitous'' drop for purposes of our exchange rate

methodology.

In the preliminary results, we determined that, because a large and

precipitous drop occurred on July 2, 1997, it was appropriate simply to

begin on that day to use a new benchmark in order to avoid using daily

rates from before the precipitous drop in calculating the benchmark for

daily rates after the precipitous drop. Accordingly, for exchange rates

between July 2 and August 27, 1997, for the preliminary results, we

relied on the standard exchange rate model, but used as the benchmark

rate a stationary average of the daily rates over this period. For

these final results, however, we have changed the methodology applied

to the period following July 2, 1997, using the methodology set forth

in Pipes and Tubes from Thailand.

The gradual decline in the value of the baht over several months

after July 2 was not so large and precipitous as to reasonably preclude

the possibility that the exchange rate fluctuated from time to time

during that period. Therefore, it is appropriate for the Department to

use its standard methodology so as to ``ignore'' those fluctuations in

accordance with section 773A of the Act. However, we also recognize

that, following a large and precipitous decline in the value of a

currency, a period may exist during which exchange rate expectations

are revised, and it is unclear whether further declines are a

continuation of the large and precipitous decline or merely

fluctuations. Under the circumstances of this case, such uncertainty

may have existed following the large, precipitous drop on July 2, 1997.

Thus, we devised a simple test for identifying a point following a

precipitous drop at which it is reasonable to think that exchange rate

expectations have been sufficiently revised that it is appropriate to

resume using the normal methodology. Beginning on July 2, 1997, we used

only actual daily rates until the daily rates were not more than 2.25

percent below the average of the 20 previous daily rates for five

consecutive days. At that point, we determined that the pattern of

daily rates no longer reasonably precluded the possibility that they

were merely ``fluctuating.'' (Using a 20-day average for this purpose

provides a reasonable indication that it is no longer necessary to

refrain from using the normal methodology, while avoiding the use of

daily rates exclusively for an excessive period of time.) Accordingly,

from the first of these five days, we resumed classifying daily rates

as ``fluctuating'' or ``normal'' in accordance with our standard

practice, except that we began with a 20-day benchmark and on each

succeeding day added a daily rate to the average until the normal 40-

day average was restored as the benchmark.

Applying this methodology in the instant case, we used daily rates

from July 2, 1997, through August 4, 1997. We then resumed the use of

our normal methodology through the end of the POR, starting with a

benchmark based on the average of the previous 20 reported daily rates

on August 5.

[[Page 69484]]

With respect to the petitioners' comment regarding SSSS from

Taiwan, we note that in that case, unlike in the instant case, we found

that changes in the exchange rate were moderate, and that while the

value of the New Taiwan dollar relative to the U.S. dollar declined

steadily, the overall decline was less than 20 percent over the entire

period of investigation. In the instant case, the value of the baht

declined a comparable amount in one day. Such a large decline over an

extremely short period of time leads us to determine that the decline

in the baht was ``precipitous.''

Comment 2--Significant Inflation

Referring to comments they submitted to the Department on May 10,

1999, the petitioners maintain that the inflation rate in Thailand was

significant during the POR. On this basis, they urge the Department to

apply its ``significant inflation calculation methodology'' by

requiring the respondents to report their costs on a monthly basis, and

by making price comparisons within the same calendar month rather than

within the 90/60-day contemporaneity window. The petitioners claim that

during most months of the POR, the monthly inflation rate in Thailand

exceeded the monthly rate (i.e., 1.87 percent) which, when compounded

over a 12-month period, would yield an annual inflation rate of 25

percent, the Department's standard threshold for finding significant

inflation. As further evidence of significant inflation, the

petitioners point to the sharp drop in the value of the baht during the

POR and the 85-percent increase in the price of tin, an input product

for the canned fruit industry.

SFP and TIPCO reject the petitioners' argument, contending that

Thailand's inflation rate did not exceed the Department's standard

threshold rate of 25 percent during the POR. These two respondents

argue that the Department, therefore, has no reason to change the

calculation methodology used in the preliminary results.\2\

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\2\ SFP's and TIPCO's rebuttal of the petitioners' comments is

largely a restatement of the arguments submitted in their joint May

14, 1999, letter to the Department. On May 26, 1999, the Department

also received a letter from KFC, objecting to the petitioners' May

10, 1999, comments.

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Furthermore, SFP points out that in the preliminary determination

in Stainless Steel Sheet and Strip in Coils from South Korea, 64 FR 137

(January 4, 1999), the Department rejected an inflation analysis

similar to the one proposed by the petitioners in this review. Finally,

SFP dismisses the petitioners' argument regarding the increase in tin

prices as being overly simplistic. Department's Position: Generally,

when the annual inflation rate in the country under investigation

exceeds 25 percent, the Department considers the inflation to be

significant and uses a modified methodology. See, e.g., Import

Administration Antidumping Manual, Chapter 8, Section 15 (January

1998). Based on this practice, in a May 28, 1999, memorandum, we

rejected the petitioners' request that cost data be reported on a

monthly basis because we found that the rate of inflation in Thailand

during the POR was not at a level such that it would warrant a special

calculation methodology (see May 28, 1999, memorandum addressing this

issue). Accordingly, we did not require the respondents to report their

costs on a monthly basis for purposes of the preliminary results. We

have continued to apply our standard methodology for the final results

of this review because we have not received any new facts which would

lead us to change our preliminary findings.

All parties filing case briefs made other arguments on the

calculation of COP in the presence of significant inflation, in the

event the Department would find that there was significant inflation

during the POR. However, these comments are now moot as we have not

found that significant inflation existed during the POR.

Comment 3--Treatment of Certain Tax Certificate Revenues

SFP and TIPCO object to the Department's preliminary decision not

to adjust for the value of certain tax certificate revenues in the

calculation of the COP. The two respondents state that upon exportation

they received the tax certificates as a refund of an internal Thai tax

imposed on materials. They assert that in the past, the Court of

International Trade (CIT) and the Department, on remand, have

determined that similar tax certificate programs constitute refunds

upon exportation within the meaning of the statute (see Camargo Correa

Metais, S.A. v. United States, No. 98-152, Slip. Op. at 5 (CIT 1998)

(Camargo)). SFP and TIPCO maintain that the tax certificates are a

result of the two companies' export activities and that the Department

should adjust the COP for the value of these certificates as taxes

remitted or refunded at the time of exportation.

SFP and TIPCO note that the Department requires that there be a

sufficient link between the refund and the cost of materials before a

cost adjustment is permitted (see, e.g., Stainless Steel Round Wire

From India; Final Determination of Sales at Less Than Fair Value, 64 FR

17319 (April 9, 1999) (Round Wire from India)). According to the two

respondents, there is sufficient evidence on the record of this

proceeding that the calculation of the value of the tax certificates is

based on the cost of material inputs. They argue that the Department's

preliminary finding in this review--that the tax certificates are not

sufficiently linked to material costs--is inconsistent with its

determinations in the investigation and prior reviews of this case in

which an adjustment of the COP by the value of the tax certificates was

allowed.

According to SFP and TIPCO, the Department's preliminary finding is

also inconsistent with its analysis of the tax program in several

countervailing duty proceedings. Specifically, they point to Certain

Apparel from Thailand: Preliminary Results of Countervailing Duty

Administrative Review, 62 FR 46475 (September 3, 1997), in which the

Department found that all inputs for which the respondents received

duty drawback were physically incorporated in the exported product. SFP

and TIPCO also note that in past cases, the Department has verified

that the calculation of the rebate is tied to material inputs. They

argue that the Department cannot have it both ways: denying a cost

adjustment in an antidumping proceeding because the refund is ``not

related to cost of production'' while at the same time, in a

countervailing duty proceeding, finding that the tax certificate

program includes only physically incorporated inputs. On this basis,

both respondents urge the Department to change its preliminary results

and allow an adjustment of COP by the value of the tax certificates

they received during the POR.

The petitioners respond that while the statute may allow an

adjustment to the COP for internal taxes on raw materials that are

refunded upon exportation, such authority does not relate to the refund

situation in this review. They note that at verification, the

Department found no evidence that the revenue from the tax certificates

is tied to a duty drawback scheme. The petitioners point out that the

Department also verified that the value of the tax certificates is

based simply on a percentage of a company's export revenue. On this

basis, the petitioners argue, the Department was correct in not

allowing any adjustments for the tax certificates.

Regarding Round Wire from India, the petitioners argue that this

determination squarely supports the Department's decision to reject an

offset to cost and an increase in U.S. price because in

[[Page 69485]]

Round Wire from India, the Department found that the refunds were

unrelated to the customs duties paid to purchase raw materials for the

manufacture of the subject merchandise.

The petitioners also argue that the respondents' reliance on

Camargo is misplaced. They state that the decision in Camargo was that

a tax credit, which constitutes a refund, should be deducted from a

respondent's constructed value (CV). However, as determined in Round

Wire from India, the import duties at issue in that case were not

refunded upon exportation because the refunds were not directly based

upon import duties paid on raw materials. Rather, they were based on

the f.o.b. export price. The petitioners state that the facts in the

current review are similar to those in Round Wire from India and that

the Department, therefore, should reject the respondent's proposed

offset to cost.

With regard to TIPCO's duty drawback claim, the petitioners state

that this respondent has not made any effort to satisfy the

Department's long-standing two-pronged test for duty drawback

adjustments. The petitioners note that in order to add the duty

drawback to U.S. price, the Department requires that a company show

that the import duty and the rebate are directly linked to one another

and, also, that there were sufficient imports to account for the duty

drawback received for the export of the manufactured product. The

petitioners argue that TIPCO has failed to show a direct link between

any import duties and the rebate amount and that the Department,

therefore, was correct in rejecting the company's duty drawback claim.

Department's Position: In determining whether a respondent can

reduce its reported cost of manufacture by the amount of tax rebates it

receives, the Department requires that the respondent show there is a

link between claimed rebates and its cost of manufacture. See Round

Wire from India, 64 FR at 17321. We acknowledge that we had accepted

the respondents' claimed adjustment in previous segments of this

proceeding, and had also examined this program in the context of

several countervailing duty reviews, finding a link in those instances.

However, based on information concerning the tax rebate program

gathered during the verification of another respondent, Vita, and

placed on the record of the instant review, we found no link between

the tax rebates and the respondents' cost of manufacture that would

allow us to treat this factor as a cost adjustment. Instead, the

information we obtained at verification showed that the tax rebate is

linked not to the cost of manufacture, but to exports, at a rate

determined by the government and applicable to all companies that

export. Based on this information, we issued a supplemental

questionnaire to TIPCO, asking the company to provide us with

information that would establish the requisite link. TIPCO failed to

provide us with specific documentary evidence establishing this link.

Further, SFP has not submitted any evidence for the record that

establishes such a link. Accordingly, for the preliminary results we

changed our previous treatment of this tax rebate program and

disallowed it as a cost adjustment.

Although TIPCO and SFP continue to hold that such a link can be

established, neither respondent has submitted evidence which

demonstrates that the tax rebates can be tied to its cost of

manufacture in a way that would permit us to apply the rebates as cost

offsets. In fact, TIPCO has stated that it ``does not import directly

any raw materials and does not pay directly any import duties in

connection with its raw material purchases.'' (See TIPCO submission of

April 22, 1999, page 1.) Based on the information on the record that we

obtained at verification showing that the tax rebate is linked to

exports and not to the cost of manufacture, and absent any record

information in the instant review showing that such a link exists, we

have continued to disallow the respondents' reported cost adjustment

for these final results. Additionally, given that TIPCO has not shown

that a link exists between the rebate program and any import duties it

paid, it has failed the first prong of the Department's two-prong test

for duty drawback adjustments and, thus, we have not made any

adjustment to TIPCO's U.S. price.

Comment 4--Methodology for Allocating Fruit Costs

SFP and TIPCO contend that the Department improperly used a net

realizable value (NRV) methodology to allocate fruit costs for purposes

of calculating COP and CV. The respondents state, first, that the Court

of Appeals for the Federal Circuit (CAFC) ruled in IPSCO, Inc. v.

United States, 965 F.2d 1056 (Fed. Cir. 1992) (IPSCO), that value-based

allocations of costs shared by co-products are not allowed under the

antidumping law. Second, the respondents argue that the IPSCO ruling

was applied specifically to this case by the Court of International

Trade in Thai Pineapple Public Co., Ltd. v. United States, 946 F. Supp.

11 (CIT 1996) (TIPCO), where the CIT ruled in an appeal of the

Department's final determination in the underlying investigation of

this case that IPSCO applies to the allocation of fruit costs.

Regarding the specific cost allocation methodology to be used in

place of the NRV methodology, these respondents argue that the

Department should rely upon the weight-based fruit cost allocations

submitted in their questionnaire responses. SFP and TIPCO maintain that

their allocation methodologies are consistent with those reported by

certain mandatory respondents in the original investigation and which

were later adopted by the Department in the remand proceedings stemming

from the less-than-fair-value investigation.

The petitioners reject the respondents' argument that NRV is not

allowable in this case because of the CIT's decision in TIPCO. They

support the Department's position that an NRV allocation methodology is

both lawful and correct in order to allocate joint costs properly. The

petitioners also state that the CIT decision is being reviewed by the

CAFC and argue that the Department should, therefore, continue to use

the NRV methodology.

Department's Position: Consistent with past segments of this

proceeding, we have continued to allocate raw fruit costs incurred by

the respondents using an NRV methodology which reasonably reflects the

qualitative differences that exist between the joint raw materials used

to produce CPF and other pineapple products, e.g., pineapple juice. See

Preliminary Results, 64 FR at 30478. We disagree with SFP's and TIPCO's

contention that a weight-based methodology would be appropriate. As we

stated in the final determination of the underlying investigation of

this case, ``[w]e believe * * * that allocating the cost of pineapple

evenly over the weight is not supportable. Using weight alone as the

allocation criteria sets up the illogical supposition that a load of

shells, cores, and ends costs just as much as an equal weight of

trimmed and cored pineapple cylinders. Significantly, the use of

physical weighting for allocation of joint costs, i.e., in this case

the cost of pineapple fruit, may have no relationship to the revenue-

producing power of the individual products.'' See Final Determination

of Sales at Less Than Fair Value: Canned Pineapple Fruit from Thailand,

60 FR 29553, 29560 (June 5, 1995) (Final Determination). Because the

parts of the pineapple are not interchangeable when it comes to CPF

versus juice production, it would be unreasonable to value all parts

equally by using a weight-based allocation methodology. Instead, as we

[[Page 69486]]

detailed in our Preliminary Results, we have used an NRV methodology

for allocating fruit costs. This methodology compares historical cost

and sales data for pineapple fruit products over a period encompassing

several years prior to the antidumping proceeding and also includes

data for markets where allegations of dumping have not been lodged. Id.

Because NRV is commonly defined as the predicted selling price in the

ordinary course of business less reasonably predictable costs of

completion and disposal, we believe this methodology takes into account

the qualitative differences between pineapple parts in the production

process.

Furthermore, on July 28, 1999, the CAFC, while not ruling on the

merits of the NRV methodology, gave deference to the Department in

selecting and developing proper methodologies. See the Thai Pineapple

Public Co. v. United States, 187 F. 3d 1362, 1366-67 (Fed. Cir., July

28, 1999) (Thai Pineapple). In this ruling, the CAFC reversed the CIT's

decision in TIPCO to remand the case to the Department for

recalculation of the antidumping duty margins using either a weight-

based or a non-output price-based cost allocation methodology, and

instead held that the Department's rejection of the respondents'

weight-based methodology, in favor of the allocation methodology

employed by the respondents in their books and records, was reasonable

and supported by substantial evidence. See Thai Pineapple at 1367.

With respect to the respondents' reliance on IPSCO, the Department

has consistently held throughout this proceeding that IPSCO is not

controlling in this case. See, e.g., Notice of Final Results of

Antidumping Duty Administrative Review: Canned Pineapple Fruit From

Thailand, 63 FR 7392, 7398 (February 13, 1998). In Thai Pineapple, the

CAFC recognized that there are important differences between IPSCO and

the present case. The CAFC held that:

[P]ineapple fruit is not a homogeneous raw material like the raw

material used to make the pipe in [IPSCO], and the production

process is entirely different for the various pineapple products

produced. The whole pineapple must be reduced to its various

components--cored cylinders, cores, shells and ends--prior to

entering the production processes for canned pineapple fruit and

juice. Although the raw material was purchased as a whole, for a set

price per unit of weight, the parts of the pineapple differ in their

usefulness and value.

Thai Pineapple at 1369. On this basis, the CAFC concluded that the CIT

improperly held that IPSCO is controlling precedent in this case. The

Department, therefore, rejects the respondents' argument that IPSCO

would prevent us from applying our NRV methodology in this case.

Comment on Company-Specific Issue

Comment 5--Calculation of TIPCO's Interest Expense Ratio

TIPCO requests that the Department recalculate the company's

interest expense ratio for purposes of the final results of this

review. In the preliminary results, the Department calculated this

ratio by first subtracting TIPCO's interest income from its total

interest expense, using data from the company's consolidated financial

statements. Next, the Department divided the resulting net interest

expense by the total cost of goods sold and applied this ratio to the

cost of manufacturing. TIPCO argues that, in addition to interest

income, the Department should also subtract dividend income that the

company received during the POR from an associated company. TIPCO

believes that this additional offset is justified because the

associated company is not consolidated with TIPCO and, moreover, the

dividend income is short-term in nature because TIPCO is not required

to maintain its holdings in the associated company for any specific

length of time.

The petitioners argue that, under the Department's practice,

dividend income is not an allowable offset to interest expenses, which

may be reduced only by interest income earned on short-term investments

of working capital. The petitioners contend that in previous cases, the

Department has not allowed companies to offset their financial expenses

with income earned on investments such as dividend income (see Silicon

Metal from Brazil: Notice of Final Results of Antidumping Duty

Administrative Review, 64 FR 6305 (February 9, 1999) and Antifriction

Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From

The Federal Republic of Germany; Final Results of Antidumping Duty

Administrative Review, 56 FR 31734 (July 11, 1991)).

Department's Position: We agree with the petitioners. As stated in

the above-mentioned cases, the Department includes only short-term

interest income as an offset to interest expenses. This practice was

upheld by the CIT in Gulf States Tube Division of Quanex Corp. v.

United States, 981 F. Supp. 630 (CIT 1997) and NTN Bearing Corp. v.

United States, 905 F. Supp. 1083, 1097 (CIT 1995) in which the CIT held

that, to qualify for an offset, interest income must be related to the

``ordinary operations of the company.'' As the Department stated in the

Final Determination of Sales at Less Than Fair Value: Certain Preserved

Mushrooms from India, 63 FR 72246, 72252 (December 31, 1998), it allows

a company to offset its financial expense with the short-term interest

income earned on working capital accounts maintained to support its

daily cash requirements (e.g., payroll, suppliers, etc.). However, the

Department does not allow a company to offset its financial expense

with the income earned from investment activities (e.g., long-term

interest income, capital gains, dividend income).

Final Results of Review

As a result of our review, we determine that the following

percentage weighted-average margins exist for the period July 1, 1997,

through June 30, 1998:

------------------------------------------------------------------------

Margin

Manufacturer/exporter (percent)

------------------------------------------------------------------------

TIPCO...................................................... 9.87

SFP........................................................ 3.25

Vita....................................................... 17.53

KFC........................................................ 3.57

SIFCO...................................................... 3.32

------------------------------------------------------------------------

The Department shall determine, and the Customs Service shall

assess, antidumping duties on all appropriate entries. In accordance

with 19 CFR 351.212(b)(1), we have calculated importer-specific

assessment rates by dividing the dumping margin found on the subject

merchandise examined by the entered value of such merchandise. We will

direct the Customs Service to assess antidumping duties by applying the

assessment rate to the entered value of the merchandise.

Furthermore, the following deposit requirements will be effective

for all shipments of the subject merchandise entered, or withdrawn from

warehouse, for consumption on or after the publication date of these

final results of administrative review, as provided by section 751(a)

of the Act: (1) For the companies named above, the cash deposit rate

will be the rate listed above, (2) for merchandise exported by

manufacturers or exporters not covered in this review but covered in a

previous segment of this proceeding, the cash deposit rate will

continue to be the company-specific rate published in the most recent

final results in which that manufacturer or exporter participated; (3)

if the exporter is not a firm covered in this review or in any previous

segment of this proceeding, but the manufacturer is, the cash deposit

rate

[[Page 69487]]

will be that established for the manufacturer of the merchandise in

these final results of review or in the most recent segment of the

proceeding in which that manufacturer participated; and (4) if neither

the exporter nor the manufacturer is a firm covered in this review or

in any previous segment of this proceeding, the cash deposit rate will

be 24.64 percent, the all others rate established in the less-than-

fair-value investigation. These deposit requirements shall remain in

effect until publication of the final results of the next

administrative review.

This notice also serves as a final reminder to importers of their

responsibility to file a certificate regarding the reimbursement of

antidumping duties prior to liquidation of the relevant entries during

this review period. Failure to comply with this requirement could

result in the Secretary's presumption that reimbursement of antidumping

duties occurred, and in the subsequent assessment of double antidumping

duties.

This notice also is the only reminder to parties subject to

administrative protective order (APO) of their responsibility

concerning the return/destruction or conversion to judicial protective

order of proprietary information disclosed under APO in accordance with

19 CFR 351.305(a)(3). Failure to comply is a violation of the APO.

This determination is issued and published in accordance with

sections 751(a)(1) and 777(i)(1) of the Act.

Dated: December 6, 1999.

Richard W. Moreland,

Acting Assistant Secretary for Import Administration.

[FR Doc. 99-32223 Filed 12-10-99; 8:45 am]

BILLING CODE 3510-DS-P